Stock Continental experiences a sell-off following a purchase endorsement
Lively Lowdown:
The market's buzzing about Continental's stock after UBS's buy recommendation. It's been surging in pre-market trading, with analyst David Lesne expecting the spin-off of the automotive supply business to unleash the full potential of the tire division. By midday, Conti's shareprice is up 4.3%, making it the Dax's top performer.
On Tuesday, the Dax continued its record-breaking run, targeting the all-time high it set earlier. By midday, it was up 0.2% to 18,650 points, with CMC Markets suggesting the uptrend could propel it to 19,000 points. In a bullish market, the probability of a continuation is higher than a reversal. As the Dax found support at increasingly higher levels, it tested the 50-day line at around 17,300 points in early August, and now stands almost 2,000 points above the 200-day line—reflecting its accumulated momentum since the beginning of 2023.
Meanwhile, Chief Market Analyst Jochen Stanzl believes the Dax's momentum suggests hope for the German economy's recovery in 2025. With signs of multiple interest rate cuts by the European Central Bank and the Federal Reserve in the coming months, investor confidence is growing.
Daimler Truck, however, took a hit on Tuesday due to Goldman Sachs' downgrade. The stock slipped to the bottom of the Dax, dropping 1.2% to 34.16 euros by midday.
In the US, tech stocks took a breather at the start of the week. The tech-heavy Nasdaq Composite fell 0.9% to 17,726 points, with Nvidia once again garnering attention ahead of its earnings report. Investors are eagerly anticipating perfect numbers and guidance to continue the rally that has lifted the stock over 160% year-to-date, fueled by the hype around artificial intelligence.
Tesla shares also saw a dip, down 3.2%, due to Canadian Prime Minister Justin Trudeau’s plans to impose a 100% tariff on the import of electric vehicles from China. Data from Canada's largest port in Vancouver shows that imports of cars from China have surged 460% year-to-date in 2023, since Tesla began shipping Shanghai-made electric vehicles to Canada.
Apple shares, however, edged up slightly, as anticipation grows for the unveiling of the iPhone 16 on September 9. The company is hoping that additional AI features will breathe new life into its flagging sales, particularly in the crucial Chinese market.
The euro stabilized on Tuesday after a minor setback at the start of the week. It is currently trading at $1.1166, just slightly higher than the previous day's close. Despite some analysts' surprise at the Federal Reserve Chair Jerome Powell's clear indication at the Jackson Hole symposium that the time for rate cuts in the US had come, the euro seems to be holding steady.
Later in the day, the market will receive updated data on the German economy's performance in the second quarter, which is expected to remain subdued, according to Helaba analysts. The benchmark German Bund future has dropped by 0.3% to 133.94%, while the yield on 10-year German government bonds currently stands at 2.27%.
Finally, oil prices remain low. The price of a barrel of Brent crude is down 1.9% to $79.87 by midday.
- The surprising setback in the forecast for the German economy's second quarter performance might pose a general-news setback for the finance sector.
- Conti's stocks, already buoyed by UBS's buy recommendation, might continue to perform well in the business world, with the spin-off of the automotive supply business expected to release the tire division's full potential.
- Technology giants like Nvidia and Apple, despite their recent dips, are anticipated to recover and thrive, with the unveiling of new AI features expected to revitalize sales, particularly in the Chinese market.
- In the realm of finance, Jochen Stanzl's belief in the Dax's momentum suggests a hopeful outlook for the German economy's recovery by 2025, aided by potential interest rate cuts from both the European Central Bank and the Federal Reserve.
- By 2025, the technology sector, powered by advancements in artificial intelligence, could surprise many with its continued growth and rallies, as observed by the significant increase in Chinese electric vehicle imports and the anticipation surrounding Nvidia's earnings report.
